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A Big Whine From Big Oil

With gas at $4 a gallon, oil at $100 a barrel and profits at near-record levels, it is hard to feel sympathy for the oil industry. Yet sympathy is what the C.E.O.’s of the five biggest companies asked for when they appeared Thursday before a Senate hearing on a Democratic proposal to eliminate about $2 billion in tax breaks for the Big Five.

Exxon’s Rex Tillerson called the proposal “misinformed and discriminatory.” ConocoPhillips’s James Mulva, in a letter, called the idea “un-American” because it would supposedly cost American jobs, raise consumer prices and discourage investment — a position he reasserted during the hearings.

The other three companies at the witness table, BP America, Shell and Chevron, raised similar complaints. How absurd are their claims? Utterly absurd.

Take investment. In 2005, with oil nearing $60 a barrel, Mr. Mulva and other top executives told a Senate committee that the companies did not need the tax breaks to keep exploring for oil. Congress left them in place. Now that the Senate seems serious about getting rid of them, he and his colleagues have changed their tune — even though their companies obviously need them even less at $100 a barrel.

Or take prices at the pump. In a memorandum to Senate Democratic leaders on Wednesday, the nonpartisan Congressional Research Service said that eliminating the tax benefits would have virtually no effect on the price of gasoline. The impact on industry profits — the Big Five earned a robust $35 billion in the first quarter of this year alone — would be trivial.

The report also addressed one more industry claim: that ending the tax breaks for the oil companies alone would be discriminatory. Most of the breaks — deductions for well depletion, intangible drilling costs and the like — are unique to the industry. The exception is a deduction for domestic production, designed to encourage all manufacturing companies to invest in this country. But as the research service pointed out, industry is not going to stop drilling on American territory as long as the oil is there and yielding big dollars.

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These subsidies are clearly unnecessary, and returning $2 billion to the Treasury would be a good thing. But more than anything, one has to wonder why the oil companies are fighting so hard for a comparatively small amount of cash, at least for them. The only explanation we can come up with is that they have always gotten what they wanted and expect to do so now, so why not?

The House is certainly tripping over itself to do the industry’s bidding. Last week, it passed two more irresponsible bills accelerating drilling permits and authorizing leasing in long-protected waters of the north and central Atlantic coasts, the Southern California coast and Alaska, including Bristol Bay. It is as if the BP spill in the Gulf of Mexico had never happened.

It is imperative that the Senate block the House’s drilling and leasing plans, and that President Obama veto them if the Senate caves. And both the Senate and the president should keep pressing to eliminate the tax breaks. Three-fourths of Americans responding to a recent NBC News/Wall Street Journal poll said they want to end them.

Obviously, $4-a-gallon gas has something to do with this. But there is also an elemental matter of fairness here. As Mr. Obama put it in his radio address a week ago, when the oil companies are making huge profits and people are suffering and deficits are growing, “these tax giveaways aren’t right. They aren’t smart. And we need to end them.”

A version of this editorial appears in print on May 15, 2011, on Page WK7 of the New York edition with the headline: A Big Whine From Big Oil: Rolling in profits from $100-a-barrel-oil, the industry still wants its tax breaks. Today's Paper|Subscribe